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Elon Musk On Housing Market Bubble: ‘They Dug Their Own Graves- Detail Explored!!

As shown in films, a subprime mortgage crisis, like “The Big Short” and “Margin Call,” fueled the housing bubble that preceded the market catastrophe of 2007 and 2008.

The Housing Bubble

The US had overbuilt homes at the time, and dangerous lending practices had fostered an unsustainable surge in housing prices. Mortgage defaults, foreclosures, and the devaluation of housing-related instruments eventually caught up with the big banks, and the market crashed.

After prices peaked in early 2006, the housing bubble burst, and prices began to fall in 2006 and 2007, eventually reaching new lows in 2012.

Elon Musk: Tweeted…

Elon Musk, the CEO of Tesla, recently added the housing market to his Twitter commentary.

Musk weighs in on housing: Musk’s comments were prompted by a tweet from Dogecoin co-founder Billy Markus (who goes by the Twitter handle Shibetoshi Nakamoto), who claimed that cryptocurrency was “created as a statement against central bank control” in the aftermath of the 2008 housing bubble burst, which was fueled by the subprime mortgage crisis.

Markus wrote on Twitter that the global financial crisis was “created by predatory lending practices and other irresponsible foolishness, leading to the housing bubble collapsing, reckless printing of money, bailouts, and other rubbish.”

In response to Markus, Musk stated that the “axiomatic blunder” was a general belief that “housing prices will only rise.”

“I don’t favor predatory lending,” Musk tweeted, “but many of those lenders were horribly wounded or died.” “They dug their own graves, which is a lesson that we should all learn from, including me.”

Present Property news:

Today, property prices in the United States continue to rise, surpassing 2006 levels. When the COVID-19 pandemic hit the United States two years ago, the market was thrown into disarray as many people reevaluated their lifestyles.

Researchers and economists at the Federal Reserve Bank of Dallas have cautioned that early indicators of a housing bubble are emerging, but this is not the same as the housing bubble that preceded the Great Recession in 2006.

In a March blog post, analysts from the Federal Reserve Bank of Dallas expressed concern that “US housing prices are once again becoming unhinged from fundamentals.”

They blamed “exuberance” as a major factor. This leads to “expectations-driven, explosive” price hikes, which can result in “economic resource misallocation, altered investment patterns, individual bankruptcies, and wide macroeconomic implications on growth and employment.”

“When there is a widespread assumption that today’s significant price increases will continue,” researchers said, house prices can “diverge from market fundamentals.” If the majority of purchasers believe prices will continue to rise, “purchases motivated by a fear of losing out” might “push up prices and heighten expectations” of price increases.

Why is the housing market becoming more expensive?

1. Housing demand among millennials is increasing, with Gen Z close behind.

2. There Isn’t Enough Supply To Meet the Demand

3. Borrowers Are Less Likely To Fail To Pay Back Their Loans

4. Recession fears and red flags that the housing market may be in trouble

Conclusion

Overall, the housing market in the United States appears to be less dangerous than it was in the mid-2000s. While there are pockets of the quick price increase and extremely high prices, as well as a few places with somewhat high prices despite expanding supply, nowhere has paired these price patterns with rapid debt growth, as some regions did in the mid-2000s.

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